By recognising Republika Srpska (RS) as a legitimate polity and constituent entity of the new Bosnia, the 1995 Dayton Peace Agreement embraced a contradiction. For the RS was founded as a stepping stone to a ‘Greater Serbia’ and forged in atrocities against – and mass expulsions of – non-Serbs.

Ten years ago, Radovan Karadzic led the members of his Serb Democratic Party (SDS) out of the parliament of Bosnia and Herzegovina (Bosnia): soon afterwards, in January 1992, they proclaimed ‘Republika Srpska’, as part of their strategy to undermine Bosnia’s integrity and preclude its independence. First as an idea and then as a fact, the RS negated Bosnia’s history, demography and integrity.

Fortunately, Dayton also gave significant powers to the international community to promote and impose reforms on both entities, to push the integrative provisions of the agreement, and to make itself redundant as Bosnia moved towards Europe. The only hope of resolving this contradiction lay in the vigorous exercise of these civilian and military powers to reform the RS.

Almost six years after Dayton, these hopes lie unfulfilled and partly forgotten. The unreconstructed nature of the RS and its political elite remain the major obstacles to the establishment of a functional, stable and solvent Bosnian state. The current RS coalition government, formed after the November 2000 elections under the leadership of another professed moderate and reformer, Mladen Ivanic, looks likely to repeat the experience of previous years, but with the difference that the SDS is now effectively back in power. It won the RS presidency and vice-presidency and secured the largest number of seats in the National Assembly in the November 2000 elections.

Alarmed at the prospect of having to contend once more with the stonewalling and prevarication of the SDS, international representatives threatened to impose an embargo on all aid to the RS if the SDS were to be included in the government. But when its new favourite, Ivanic, insisted he could not form a viable government without the SDS, the international community backed down, allowing party stalwarts to take portfolios as ‘independent experts’.

Since returning to power, the SDS has been consolidating its authority: in the public sector and black economies, in the media, in the police and courts, in the army and intelligence service, in the backwoods of eastern RS, in enlightened Banja Luka, and latterly in the Serbian metropolis of Belgrade.

Ivanic continues to talk earnestly about implementing the economic reforms he promised the electorate – and the political reforms expected by the international community – but has been stymied most of the time by his partners’ determination that the RS should remain unreformed.

In fact, the SDS has contrived (with the inadvertent assistance of the international community) to have it both ways. Since it is not officially in government, it cannot be held responsible for Ivanic’s failures to deliver change. But since it is, in practice, the ruling party, it can gorge at the public trough while watching Ivanic’s popularity wane and preparing to ditch him in favour of another front man acceptable to the foreigners in time for the next elections in 2002.

Converted to Dayton constitutionalism, and fortified by the election of a respectable nationalist to the Yugoslav presidency in Belgrade, the rebranded SDS remains as unwilling as ever to define its ‘state’ as the rightful home of Bosnians of all faiths. The riots organised in May 2001 to prevent the reconstruction of historic mosques razed during the war and the government’s continuing refusal, even after Milosevic’s transfer to the ICTY in June, to cooperate with The Hague ought to have made plain that the RS remains true to its wartime self. Vague international threats to punish the RS on both scores led only to token concessions by the authorities.

Attacks on, intimidation of, and discrimination against non-Serb returnees to the RS remain both more common and far more serious than do their counterparts in Bosnia’s other entity, the Federation. Attacks in eastern RS, where some of the worst wartime atrocities took place, have been especially severe. Police, courts, and local authorities are usually indifferent and often complicit. Opposition to reintegration also underpins the policies of the government’s refugee ministry, which protects the wartime achievements of ethnic cleansing.

Equally detrimental to Bosnia’s future is the wrecking role played by RS representatives in the state parliament, council of ministers and other common institutions. Regarding themselves – and regarded by their political masters – as delegates mandated to preserve entity prerogatives by eviscerating those of the Bosnian state, RS deputies and ministers in Sarajevo continue to oppose any legislation which might enhance or even define the competencies of the state.

In the absence of fundamental legislation on everything from human rights, to weights and measures, to railways, Bosnians can only dream about European integration as they slip ever farther behind their neighbours in the race to the European mainstream. Meanwhile, the international community loses its exit strategy.

Hundreds of millions of international community dollars have been spent since 1997 in an effort to sustain would-be moderates and reformers in the RS – and to keep the SDS out of power. All this money invested in keeping the RS afloat and its ‘moderate’ politicians in power has failed to reform the RS economically or politically.

This startlingly poor return can be explained: there has been no coordinated effort to use this aid and support to induce compliance with the principal items on its state and peace-building agenda. Political conditionality has never been tried in a serious and integrated fashion with Republika Srpska. An aid embargo was imposed on the RS in 1996-97, to encourage the delivery of Karadzic to The Hague, but this condition was abandoned as soon as Dodik came to power.

The RS economy stands on the verge of collapse. Were it not for a continuing flow of direct international budget supports and soft loans, the RS government would be bankrupt. As the world grows bored with Bosnia (and Bosnians become tired of international oversight), as aid funds dry up, as SFOR shrinks, and as the UN mandate expires, the international community is losing what could prove its last chance to make the payment of vitally needed subventions and loans strictly conditional upon RS compliance with its outstanding demands.

The logical solution would be the dissolution of Republika Srpska due to its manifest unreformability and its incompatibility with the basic democratic development of the Bosnian state. However, such a radical step is currently neither feasible nor even desirable. It is not feasible because the international community is more than ever unwilling to reconsider its handiwork at Dayton. It is not desirable because, given the lack of international appetite to tackle difficult challenges in Bosnia, any ‘Dayton II’ would likely produce an outcome even more detrimental to Bosnian statehood. Logic and justice, therefore, must be tempered with realism. The way ahead is to demand much, much more of the RS.

If it is to work, political conditionality must be applied in a form that can be exploited by those pragmatists in the RS who understand very well that Bosnia cannot exist half pauperised and half European. It must also be credible. The potential sanctions must be as hurtful as the benefits are alluring, and there must be no doubt that either will be forthcoming. Just as importantly, donors and lenders, proconsuls and field staff, must develop and implement a joint strategy.

Interested governments, international organisations, financial institutions and, above all, the Office of the High Representative need to face the consequences that will inevitably follow if they continue to underwrite Republika Srpska’s failures. Unless a determined and concerted effort is made to impose specific, achievable conditions in return for each and every grant or loan, then Bosnia’s chances of becoming a viable state will be forfeit.

RECOMMENDATIONS

1. The states and organisations on the Peace Implementation Council should follow the example of the World Bank and International Monetary Fund (IMF) by strictly conditioning their aid and assistance to Republika Srpska on the adoption and implementation of specific political reforms. All monetary transfers to the RS should be suspended until such time as relevant and specific conditions have been set for each and every grant, subvention or project.

2. The conditions set for the resumption of financial support to the RS should, at a minimum, include:

a. Meaningful cooperation with the ICTY, including the arrest and transfer to The Hague of a specified number of indictees. SFOR, for its part, should provide a lead by apprehending Radovan Karadzic and Ratko Mladic, since it is at present unrealistic to expect RS institutions either to work with the ICTY or to safeguard the lives and property of non-Serbs until their founders and inspirators have been removed from the scene.

b. Genuine acceptance of and support for minority returns on a sustainable basis. The interagency Reconstruction and Return Task Force should develop a set of benchmarks for the RS government and its Ministry of Refugees and Displaced Persons to meet in regard to implementation of the property laws and support both for non-Serbs returning to the RS and Serbs seeking to return to the Federation or Croatia.

c. Revision of the privatisation laws and determined efforts to root out systemic corruption and party political control over the economy. OHR, in particular, should apply to the RS standards at least as high as it has imposed on the Federation.

d. Collaboration in the establishment and/or enhancement of essential all-Bosnian institutions and in the passage of legislation required for Bosnia to join European structures.

3. International donors and organisations should undertake a comprehensive audit of all budgetary supports, project funding, grants, and soft loans now in train or earmarked for the RS, as well as for the state and Federation. Unless and until it is apparent who is getting what, the international community will be unable to maximise its leverage in the attainment of its goals.

4. The donor community should consider channelling all future funding through the state and, where appropriate, making available to the state funds denied to the RS because of its failure to meet the conditions set for a particular grant or loan.

5. International aid and financial assistance to the Federal Republic of Yugoslavia (FRY) should be conditioned on, inter alia, Belgrade severing all funding to the RS military, intelligence service and police; removing all Yugoslav Army (VJ) officers and non-commissioned officers from the ranks of the RS army (VRS); and ceasing to support extremist political organisations in the RS, such as the Serb Democratic Party (SDS).